Smartphone users calling less and using their device like a mobile computer

By
LuAnn LaSalle, The Canadian Press

Published
12/20/2012 09:52:54

Apps are seen on an iPhone Wednesday, December 12, 2012 in Montreal. More consumers are using smartphones for things like mobile apps, watching video and sending texts and emails and are starting to do less calling. THE CANADIAN PRESS/Ryan Remiorz

MONTREAL - Here's my cell number. Call me, maybe?

Or maybe not. Cellphone users are doing less calling as they buy more smartphones and use the device for texting, emailing, web surfing, mobile apps, social networking and watching videos.

And it's that surge in data use that Canada's telecom companies — big and small — are banking on as the revenue driver of the future.

"They use their phone the way they would use their PC," Eiley added, noting how the use of the web is evolving from computers to mobile devices.

Dan Maitland has an iPhone and hardly uses it for calls.

"These are not just phones," said Maitland, 39, who makes software that helps train pilots to be safer at flight simulator company CAE Inc. in Montreal.

"They are small computers that have the ability to make a phone call."

Maitland said he uses his iPhone for such things as web searches, apps, accessing files for work and reading.

And Maitland is doing exactly what wireless providers expect and want him to do to help increase their data revenues in the years ahead.

The amount of voice minutes used by consumers on cellphones isn't increasing, said Eiley, co-founder of the Convergence Consulting Group in Toronto.

"Over the last two years, voice minutes have not seen any growth, whereas smartphone penetration has almost doubled."

Faster wireless networks are also helping drive the increasing use of data by consumers, Eiley added.

The Convergence Consulting Group expects that about 55 per cent of all cellphone users in Canada will have smartphones by the end of this year. That's expected to increase to 65 per cent by the end of 2013 and go up to 80 per cent by year-end 2016.

The increase in the use of data is increasing revenues for Canada's big three wireless carriers.

Rogers (TSX:RCI.B), Bell (TSX:BCE) and Telus (TSX:T) have been experiencing year-over-year growth in wireless data revenues with the rise of smartphones.

Convergence Group's Eiley said by the end of this year, data will make up roughly 39 per cent of service revenue, which includes voice and data, for Canada's major wireless providers.

Rogers' CEO Nadir Mohamed looks to a data-driven future, noting that about 65 per cent of Rogers' customers have adopted smartphones.

"Ultimately, there's no reason for me to think of a world other than everybody will have a smartphone, smart device with a connection to data, and then it's just a matter of how much," Mohamed said at a recent telecom conference in New York.

"The underlying trend will be more and more data consumption."

Maitland said he changed his monthly plan to increase his data usage and brought down the number of voice minutes to 200 from 250 — and it's costing him less.

He doesn't like making calls.

"I almost even go out of my way, personally, to find ways to be able to communicate with other people where I don't actually have to use the phone itself."

New wireless carrier Wind Mobile also sees data driving its growth.

Wind chairman and CEO Anthony Lacavera said the company's customer base is shifting to smartphones and away from talk-and-talk phones, which now have a small percentage of sales.

"I would say 2012 was the year people figured out that mobile apps can do as much as they can do with their laptops," Lacavera said from Toronto.

"People now realize there's an app for everything and now I can do all the stuff I do on my laptop with my smartphone. Consumers have really figured that out and that's driving the data growth."

Lacavera is predicting that 2013 will be the year that smartphone users really start to watch video and TV on their devices.

"The next round of data growth is going to be driven by that."

Rogers' CEO Mohamed also noted that mobile commerce, which Rogers recently launched with CIBC, will also grow in the coming years as consumers use their smartphones to pay for transactions, also adding to growth.

Eiley said the major wireless carriers correctly predicted the increase in the use of data.

"The big guys were right, they were talking about this years ago. They were talking about how all these different uses of data would drive growth."

The country's wireless carriers will have the opportunity to bid on spectrum — radio waves over which cellphones operate — later in 2013 to build out faster data-friendly networks.

The federal government is expected to auction off the premium 700-megahertz wireless spectrum, which will give both rural and city cellphone users better service.

Rogers, Bell and Telus have already rolled out faster, next-generation networks with Long Term Evolution (LTE) technology that's suited to data use, and smaller carriers are expected to follow after the spectrum auction.

Despite the changes in how consumers use their mobile phones, landlines at home haven't gone the way of the Dodo.

By the end of 2012, 82 per cent of Canadian households will have a residential wireline phone, the Convergence Group said, and just under 18 per cent of households will have only a cellphone.